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How to Get a Personal Loan With Cosigner Support
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Getting a personal loan with a cosigner can make it easier for you to qualify. A cosigner is someone who agrees to repay your debt if you fail to; they’re equally responsible for the debt. If your cosigner has better credit or a higher income than you do, then you might also be eligible for better loan terms and interest rates than if you’d applied alone.
If you are looking to apply for a loan with a cosigner, the first step is understanding your borrowing options as well as cosigner requirements. Here’s what you need to know.
Lenders that offer personal loans with cosigner support
You might need a cosigner for a personal loan because your…
- Credit score is poor
- Credit file is thin or checkered
- Income is inconsistent or lacking
- Debt-to-income (DTI) ratio is moving in the wrong direction
Whatever the case, you can save a lot of time by limiting your search lenders that accept applicants with cosigners.
|Lender||APR||Loan amount||Loan term|
|LightStream||3.99% to 19.99%*||$5,000 to $100,000||24 to 144 months||See Offers|
|LendingClub||7.04% to 35.89%||$1,000 to $40,000||Not specified||See Offers|
|OneMain Financial||18.00% to 35.99%||$1,500 to $20,000||24 to 60 months||See Offers|
|Santander Bank, N.A||6.99% to 16.99%||$5,000 to $50,000||24 to 60 months||See Offers|
|Old National Bank||8.12% to 17.51%||$5,000 to $25,000||Not specified||See Offers|
What it means to be a personal loan cosigner
If you’re getting a cosigner for a personal loan, both you and the cosigner should know precisely what that means. After all, they’re not just vouching for you, they’re signing on for the loan, too.
- Cosigners are equally responsible for the debt: If you fail to make payments, the lender can go after the cosigner for payments. And if you default on the loan, the lender can choose to sue the cosigner for the entirety of the debt, plus fees.
- If you fail to make payments, their credit will suffer: An important factor in your credit score is your payment history. If you don’t make on-time and in-full payments, both your and your cosigner’s credit are likely to take a hit.
- The loan will appear on their credit reports: Although the likely plan is that your cosigner won’t be making payments, the debt will still appear on their credit reports. This can affect their ability to obtain other loans, as their debt-to-income (DTI) ratio will be affected.
- Cosigners often can’t be taken off the loan: If your cosigner no longer wants to be on the loan, you’ll likely need to refinance. That means taking out a new loan on your own to pay off the old debt. However, some lenders offer a cosigner release program, which allows you to remove the cosigner from a loan if you’ve met certain conditions, such as making a number of consecutive payments on time and in full.
Pros and cons of applying for a loan with a cosigner
Having a cosigner can allow you to access more competitive loan terms. But your cosigner should be well aware of the inherent risks that come with cosigning a personal loan. And you should take care to alleviate any concerns they have. For example, you may share financial information with your potential cosigner that shows you can reliably repay the loan without help.
|Pros vs. cons of applying for a loan with a cosigner|
How to get a personal loan with a cosigner
The process of getting a personal loan with a cosigner is a little different than when you’re applying by yourself. There are additional cosigner requirements.
Here’s a step-by-step breakdown of the process.
- Gather your own financial information: First, you should check your own three-digit, FICO® credit score, which is the credit score lenders use when determining if you qualify for a personal loan. (You can do this using LendingTree’s app, among other methods.) You should also take stock of your DTI ratio, your current employment status and your payment history.
- Collect your cosigner’s information: You’ll also need to gather your cosigner’s information, including their income and three-digit FICO credit score. This way, you’ll have an idea of whether you’ll meet cosigner requirements and determine what interest rates and terms you may be eligible for with your cosigner’s help.
- Compare lenders and get prequalified: Now it’s time to compare lenders. Not all lenders accept cosigners (see lenders above), so you’ll need to do some upfront research. When you find a few lenders you like, you’ll apply for prequalification. You and your cosigner will enter basic personal and financial information, and submit to a soft credit check, which won’t affect your credit scores. If you prequalify and meet cosigner requirements, the lender will show you the kind of loan terms you may receive.
- Comparing loan offers: Pay attention to the loan APR, which is an accurate measure of your loan cost. Review lender fee structures, as well as available repayment terms and borrowing limits. These factors can help you determine which lender may be your best option.
- Pick your favorite offer and formally apply: After you’ve found your favorite loan offer, you can officially apply. This requires you and your cosigner to send more information to the lender, including copies of paycheck stubs and bank account statements. You’ll also each submit to a hard credit check, which will result in a small ding to your credit. Using this information, the lender will decide whether they’d like to formally offer you and your cosigner a loan, and under which terms.
- Receive your money: Lenders often make decisions within hours after receiving all of your financial info — but many take longer. That’s why it’s worth checking with your lender in advance, as some will advertise near-instant approval but others may require a couple of days for approval. If approved for a loan, you’ll coordinate with your lender on how to receive funds. In most cases, you’ll receive funds via electronic deposit.
- Make payments on your loan: You and the cosigner will be equally responsible for the personal loan. If you fall behind on payments, both your and your cosigner’s credit will take a hit, and the lender can go after the cosigner for payments. So stay on top of your monthly payments.
How to find a cosigner
Finding a cosigner isn’t always easy. For example, people with good credit — who often make for good cosigners — may not want to risk a potential hit to their credit score by signing onto another person’s loan. That’s why it’s a good idea to ask people who trust you, like close friends and family members.
If that doesn’t work, there are a few other options. You can find a cosigner online, but those services are often difficult to trust and often come with major downsides. For example, you may be charged fees and you may be matched with a cosigner that asks for a portion of your loan in exchange for their help.
Common cosigner requirements for personal loans
You probably know by now that to get a personal loan with cosigner help you’ll need a creditworthy cosigner. Creditworthy typically means:
- U.S. citizenship or permanent residency
- Good or better credit score
- Low debt-to-income (DTI) ratio
- Credit history showing a track record of repaying revolving debt and installment loans
- Positive cash flow and verifiable banking history
Keep in mind that even if you apply with a cosigner, you’ll still need to clear individualized personal loan requirements. A common borrower and cosigner requirement, for instance, is being 18 years of age or older.
CAN YOU HAVE A COSIGNER WHO LIVES OUT OF STATE?
Not all lenders allow out-of-state cosigners, but many banks, credit unions and online companies that advertise themselves nationally don’t mind. It’s always best to check with a lender before applying.
Alternatives to personal loans with a cosigner
Joint personal loan
A joint personal loan is not the same as using a cosigner. When you apply for a joint personal loan, both you and your co-borrower will own the item, vehicle or property that the money you receive goes toward.
That’s not the case with a cosigner. In that situation, your cosigner takes on responsibility for ensuring the loan is paid, but they don’t receive any ownership of what you purchase with the money.
|Key differences between a joint personal loan and a cosigned personal loan|
|Joint personal loan||Cosigned personal loan|
There’s a lot to consider before deciding whether to apply for a loan with a cosigner. It depends on your credit score, your income and who your potential cosigner might be. There’s also a lot to evaluate based on your cosigner’s financial situation.
But using a cosigner can be a great way to get a personal loan with better interest rates, or to qualify for options you may not have by yourself. If it seems like the right fit, always make sure you compare rates and pick the loan that seems ideal for you.
Other alternatives to a cosigned personal loan
If you need financing but can’t meet individual or cosigner requirements, there are alternatives to personal loans with cosigner backing.
- Secured loans: While unsecured loans hinge on your creditworthiness, secured loans also call for you to pony up collateral as part of the agreement. If you borrow a secured personal loan, for example, you might post a savings account or your car’s title. If your repayment goes south, however, the lender could seize the vulnerable assets.
- Bad credit personal loans: If your credit score is in the low 600s and isn’t doing you any favors in applications to your list of preferred lenders, you might shop around elsewhere. There are lenders that offer personal loans to less creditworthy applicants; just be prepared to face higher APRs and perhaps fees.
And if you can put off borrowing, that might be the wisest choice. By taking the time to improve your credit, DTI ratio and other key financial markers, you can qualify for a personal loan on your own down the road, without worrying about cosigner requirements.
Improving your credit can take time, but it could be as simple as making debt payments on time, including zeroing your credit card balance each month. If possible, paying more than the minimum on any other debt accounts could also help you speed up your progress.
FAQs: Personal loans and cosigners
Do personal loans require a cosigner?
Generally, personal loans don’t require applying with a cosigner. If you apply on your own and are denied funding, however, your prospective lender might direct you to apply with a cosigner or co-borrower. Applying with a cosigner could help you clear a given lender’s underwriting criteria.
Even if you can gain loan approval on your own, it might behoove you to apply with a cosigner; doing so could lower your quoted interest rate.
How easy is it to get a loan with a cosigner?
If you meet lenders’ borrower and cosigner requirements, then getting a personal loan isn’t as difficult as it might seem. Reputable lenders allow you to prequalify, confirming your eligibility and checking rates without submitting to a hard credit check that could temporarily ding your credit score. Shopping around and comparing rates and terms with multiple lenders will help you land on the best possible loan for you and your cosigner.
Why can’t I get a loan with a cosigner?
Adding a cosigner to your personal loan application doesn’t guarantee that you will gain lender approval. It merely increases your chances of qualifying and nabbing a lower APR. If you and your cosigner are denied funding, it could be because either or both of you don’t meet all of a lender’s eligibility requirements. Just because you apply alongside a creditworthy cosigner, for example, doesn’t mean that your own financial records will escape judgement.